Cambodia’s exports of apparel and footwear products increased 16.1 per cent year over year during the first half of 2018. For the year through September, US imports of apparel and textiles from Cambodia rose 14.03 per cent over the same period the previous year. Exports surged in the second half of the year after a tepid first half, supported by strong demand in the US and the European Union.

The country’s economic growth rate is expected to be slightly higher than last year’s driven mainly by domestic consumption and a continued strong export market. However, risks in the financial sector persist, with particular exposure in the construction and real estate sectors. External risks include the potential withdrawal of the EU’s trade preferences for Cambodia. Losing these benefits, which provide Cambodia full duty-free and quota-free access to the EU for all its exports with the exception of arms and armaments, will likely slow Cambodia’s export growth, and negatively impact its labor market in the short term.

The EU which accounts for more than one-third of Cambodia’s apparel and footwear exports may suspend trade privileges over the country’s apparent disregard for human rights, attacks against critics and opposition parties.